This invention relates generally to managing risk management information and, more particularly, to network-based methods and systems for managing risk management information.
Businesses engaging in complex deals, such as commercial financing, mergers, acquisitions and real estate transactions, generally conduct a due diligence analysis to access the financial strength, operational characteristics of a business, collateral and/or business value, management strength, industry dynamics, and the proposed structure of the transaction and the party or parties involved in the deal. The due diligence analysis facilitates the financing business to better evaluate and manage the risk associated with the deal after the transaction closes.
During a due diligence analysis, information, known as risk management (RM) information, is gathered from many sources. RM information is often complex and relates to various relevant areas of the overall transaction. Therefore, a number of different members of a due diligence team may need to know the same RM information in evaluating the deal. Internal deal teams typically manually and individually collect data as part of the due diligence analysis. The efforts are often duplicated, and as such, the data may be entered multiple times on multiple different systems throughout the financing business. For example, in a transaction involving the lending on accounts receivable and inventory to secure a formula based loan to a business, both an underwriting team and a legal team may be involved. The underwriting team may be focused on (i) what the collateral is, the value of the collateral, and how the collateral is valued, (ii) the financial strength and operation of the business, (iii) the management strength, (iv) the overall structure of the transaction, and (v) other factors relating to the business, industry, and collateral involved in the deal. The legal team may be focused on (i) the location of the collateral, (ii) the structure of the transaction, (iii) an understanding of the legal entities involved, and (iv) other legal factors surrounding the business, industry and collateral involved in the deal. During the due diligence analysis, both the underwriting and the legal teams will collect certain RM information to be evaluated. Although the underwriting team and the legal team may have different concerns when evaluating the RM information, much of the RM information being evaluated is the same.
Individual collection of RM information by various internal deal teams increases the risk of overlapping data collection and decreases time efficiency. Further, individual reporting by internal teams to other internal teams or external teams increases the risk of providing inconsistent or incomplete data during the documentation process, which may result in increased cycle time and costs. For example, in the collateral transaction described above, external legal counsel may request information relating to the location of the collateral from the borrower. The underwriting team may also request information from the borrower regarding the location of the collateral. Because the information is collected both manually and individually, the underwriting team may have no knowledge that the data had been previously collected by the legal team. Consequently, documentation cycle time and costs are increased. Additionally, because various deal teams may collect the RM information, the RM information may not be centralized for future monitoring and management.